tv U.S. Senate CSPAN November 9, 2011 9:00am-12:00pm EST
>> the internet trading platforms, 49, 69 line items and parts that are purchased on a regular basis, yes, sir. >> so we are still doing business with the people that we know are making inferior products that could affect our service people? >> those businesses certainly continue to be available. >> mr. sharpe, if i may ask you, your company basically does this aftermarket, right? [inaudible] >> are you knowingly or do you know of any companies other than yourself or other companies like yourself that are unable to produce quality products that are needed for our service people? >> we don't make products over absentee but we reproduced products that have been inspected properly. >> right. >> yes, there are other companies in industries like us. >> so we would have to go to china if we didn't want to because of price? >> we absolutely do not need to go to china.
>> who writes the specs? who in the world in our government writes the specs for these products and doesn't follow up on the specifications for what we're going to purchase? is it strange enough that it should basically do not need the specs, then your band like in any other purchasing from state purchasing or federal purchasing, you should be banned if you are found to be, you know, neglected of doing what was supposed to be done. who would want to answer that? >> i will answer that. in the context of our work, there is dod specification. it's called mill dashed trf dash 3535 j., that in terms of the context of test that we ran on the various parts we acquired an undercover operation, that are specs being written. >> who writes the specs? i'm sure we expect writers, from all agencies. in this case this was a department of defense specification.
but i'm sure there are others. >> who follows up on that? we brought you all in here to basically check to see if this type of a scam was going on. we found it was not just ongoing, it was flourishing. it seems to me get back to the source. if we are writing the specs, why would you let it get that far? you could shut that down in a heartbeat. >> i'm not aware of who's supposed to follow up, but i do know the specification does exist. >> does anybody in the department of defense, have you report -- brought you report to dod? >> no, sir. >> they didn't request it at all? >> yes, sir. >> if i could interrupt. this is a very specific report that we asked the gao very recently to try to go onto the internet and to see what parts would show up when they put in orders, and the cheapest parts that showed up, they are all from china. so it turned out to be counterfeit, all those have been
tested and some of the numbers that were given to them were totally fake numbers. they had just been involved working for us very, very recently. we are going to have a third panel where will have contractors for which those questions will be very -- >> mr. chairman, this is not rocket science. basically i don't know if they had an original idea or brought a product to market that would benefit mankind, if you will, from china. everything from handbags to watch his for mining equipment, everything has been basically stolen by them, as far as property rights and those types of things. i just can't figure out, if we're getting bad product and we know what it's coming from, why don't we shut it down? i know the question, why didn't the department of defense jump in and say we're paying and gillibrand products and figure where buying and paying for it twice, trying to get the right product and we're putting people in harm's way. especially our military people.
why would it take us as a committee, why wouldn't the department of defense have an internal audit asking for this? you were not asked by, mr. hillman[, by the department of defense to check this out? did they know they were getting in for your products? >> we are releasing preliminary results of her ongoing investigation this morning and have not had contact with any other outside party associated with these products other than logistics agency in order to determine whether or not the parts we were purchasing were being integrated into major weapons systems and to determine the focus part numbers that we were attempting to purchase were not an authentic part. >> thank you. >> thank you, senator manchin. senator ayotte? >> thank you, mr. chairman. i wanted to follow-up with what senator manchin said. as i understand it, mr. sharpe, you said in your view we don't need to go to china. can you explain that?
>> there is an awful lot of product over in china that is certainly not counterfeit. going to china to buy from the non-authorized sorceress is a sure way as far as we can see right now to get ourselves in trouble. there are authorized sources in china that get products directly from the authorized component manufacturers. i would not say that dealing with those folks, as long as they are selected and audited, would not be a reason why we could not buy from them. but the open market of china, is deathly not a place to go. >> one thing i certainly appreciate that we have a need to trade, and to trade with china. however, they seem to be flaunting our intellectual property laws. they obviously in this instance
the counterfeit products, let's just be clear, it's a matter of life and death. when i see that this, some of these counterfeit products from if you're a navy helicopter pilot or an air force sea 27 j. pilot and you can't trust your fight system -- flight system or your night capability, this could be a matter of life and death, could it not for our soldier? >> yes, senator. >> and it seems to me when we know that there's a particular area of china, shenzhen that is producing openly producing these counterfeit products, why we even allow those products to come across our borders to get into our supply system? >> is a very good question if it's coming from the open market. i agree. >> in my view i think we need to send a stronger message to china, rather than trying to continue to talk when the response we get back is we are taking care of this and clearly, they are openly allowing this to
happen. it's a matter of life and death for our soldiers. i hope that we will take stronger action to cut them off. as a follow-up i wanted to ask one of the concerns that i have had since i've been a member of this committee, chairman levin talked about cost-plus contract and how they could expose u.s. taxpayers to the cost of replacing counterfeit or fraudulent goods. and we are basically paying both ways for this. that's one of the reasons why senator mccain and i certainly we've introduced legislation to minimize the use of cost plus contracts, but mr. toohey, can you tell me why shouldn't the contractors bear the risk here within the supply chain for counterfeit products? >> well, senator, from our perspective everything out to be done that can be done to ensure that legitimate product is going
into these products are and while i'm not very family with the details of defense contracting, you know, it seems like a reasonable approach to expect companies and contracts to do everything they can to ensure these products aren't legitimate. >> you would agree with me that taxpayers shouldn't have to pay twice for the goods, and, obviously, the important military equipment that we are paying quite a bit of money for? >> certainly win measures can be done and policies that can be put in place to ensure, better ensure the authentication of these products i would certainly agree, senator. >> the other issue i want to ask about, you mentioned the case of vision tech, which was a prosecution in federal court to address aggressively prosecute the counterfeit, counterfeiting traffickers to enable you identified it as a first case of its kind. why is that?
why aren't we prosecuting more of these cases? because if we prosecute people who are putting these products in the line and, obviously, know that they are trafficking and counterfeiting products that will also be a great deterrent, particularly to contractors in the unites states. >> senator, i could not agree more. we ought to be aggressively ross achieving these criminal entities. that's what they are. their criminal entities that are putting our lives of our soldiers at risk. i should say, my understanding vision tech was the first felony conviction. there are several other pending cases but from our perspective the work of the u.s. attorney in the district of columbia and the u.s. district attorney in this regard really single-handedly is forcing these cases and these prosecutions forward has just been extraordinary. it ought to be recognized and we need to do more of it as a country. >> i couldn't agree with you
more. i'd like to see more felony prosecutions because we are talking about life or death decisions here, and these cases, the more we aggressively prosecute these individuals, particularly if we find out that there's a contractor or a company in the united states that knows they are trafficking in counterfeit goods to our military to go into important parts that they have to, you know, equipment that they have to rely on, i can tell you that will also be a way to stop them. >> if i could just add. we cooperate very closely with the u.s. attorney on those cases and on a number of other cases, and we stand ready to strengthen that. it needs to be a partnership to authenticate which chips are counterfeit. we have a strong cooperation with law enforcement officials here, and we would like to strengthen that. >> mr. hillman, i believe senator brown asked you a question about one of the issues that leads to my commute about this whole, not seems to be a profit motive. these cases seem to be, the
chinese trying to make money off of us, and other countries but primarily the chinese are participating in this. but if it isn't that easy to do this, couldn't this also easily become away for sabotage to be conducted on our military, espionage? is this something we should be concerned about, not only as something that is as undermining and putting our troops at risk with equipment they are using, but in a context for our our national security? >> there certainly is a possibility that there could be counter motives other than financial benefits associated with the counterfeiting of, and harvesting of, old parts and put into a fashion that they appear to be new. the vendors that we have
supplied these parts from, appear to be more of a boiler room operation where they are willing to supply parts of the unknown authenticity for the remuneration that is provided from those parts. >> certainly this represents a vulnerability that goes, could be far-reaching if we don't address it within our department of defense. >> i agree. >> thank you. >> thank you, senator ayotte. we will have a chance in the next few weeks when our bill comes to the floor to take some statutory legislative steps, which i hope we will all be able to support. anyway, we will have that opportunity you made reference to, so we thank you for that. senator collins. >> thank you, mr. chairman. mr. chairman, let me start by thanking you and the ranking
member for conducting such an in depth investigation into such an important problem. i would point out that this problem is not a new one. i recall back in 2004 looking into this issue of the security of the supply chain. and at that time in 2004, the department of defense initiated the trusted foundry program, which senator udall referred to. this program was intended to ensure that mission-critical national defense systems have access to trusted parts and assured supplies. under this program, dod actually accredits suppliers that provide
microelectronic design manufacturing and assembly services to meet certain standards to ensure the integrity and the reliability of the product. i happen to be familiar with this program, because one of the trusted foundry's is in south portland, maine. it is not operated by texas instruments. it used to be national semiconductor. so my question is, what happened to this program? has it not worked as well as what was hoped back in 2004 when it was launched by the pentagon? should government and the owners and operators of critical infrastructure be making better use of these trusted foundry's? what is your assessment? we'll start with you, mr. toohey, and then go down the
panel. >> well, continue very well pointed out the trusted foundry program is a very important system that allows certain mission-critical items, especially new items to go into the defense department supply chain in a very ushered way. in many ways what we're talking here are parts that are no longer manufactured and our replacement parts or systems that have been, that have been in place for many, many years. that's an area that is my understanding does not do with. i think is given, you know, the increasing amount of semiconductor content and so many different products, civilian products and defense products, probably a single solution isn't going to do it, that there does need to be a broader solution to authenticate and partnership with the trusted foundry program. >> i guess my reaction to that is similar to the point that senator brown raised, which is maybe we should look at where we
are buying these parts and reconsider the manufacturing of those parts in the united states. we do have the capability and the problem of counterfeiting is that high, and if it is causing us to pay twice for the same part, then perhaps we should look at not only the integrity of the supply chain, but whether we are dealing with reputable countries as sources for vital equipment. >> and if i could just add, in many cases these counterfeiters are remarking these products so they may appear as if they were made in the united states, and so that is clearly part of the problem. from a third party, these criminal enterprise like a vision to present these products as certified military. >> products. and that's all just fake. that's a big part of the problem.
>> actually, that leads very well into my next questions i still want to hear the rest of the panel assessment of the trusted foundry program, but let me first go to a next question. mr. toohey, in your written testimony you noted that customs and border patrol agency plays an important role in anti-counterfeiting efforts by notifying trademark owners of suspected shipments that are coming into our ports. now, previously this effort by customs and border protection included sending photos of seized chips to the original industry manufacturer. and they could assess whether or not they were legitimate chips, or whether they were counterfeit. but i understand that customs border patrol officers have now
been given revise guidance to redact the identifying marks on the chips in the photographs, except the trademark. i have to say that makes no sense to me whatsoever. because they are rejecting information that would allow the manufacturers to assess whether the chip is legitimate or not. what is your judgment on the change in policy? >> you articulated very well. it was a system that for many years worked very well. especially now where counterfeiters have very advanced marketing techniques. it's almost impossible to tell just by visual inspection whether a chip is counterfeit or not. really the only way is with the code that is on the chip. our companies can instantly identify whether that is a counterfeit or not. instantly. it is a process that works very well for many years.
as a result of an interpretation inside cbp they have changed that practice, and we have been working very hard to encourage them to revert to the practice of sharing those codes. it's virtually the only way that our customs officials can stop suspect and know whether or not it is counterfeit at the border to the only way. we've been really asking anyone who will listen to us about how we can work with customs to change that policy to allow us to stop these chips at our border. we talked about the industry, we stand very ready and we have been eagerly, eagerly asking government officials to let us help them. and it's a policy change that in our view, senator, needs to happen to protect our borders. we need to close our front door. >> mr. chairman, i would just note that that is a bad point policy change, and one that i
hope we can remedy. i've like to very quickly as the rest of our panel to comment on those two issues, the trusted foundry program and a change by customs and border patrol. protections, rather. >> as part of our ongoing investigations, the parts where purchasing are rare, obsolete, hard to find parts that would not be included in the trusted accreditation program. although, it is very clear that the department of defense continues to rely on parts that have old manufacture dates, as something similar to what's being done for newer parts. would be a possibility that could be considered for these older obsolete parts as well. and we also, regarding the customs activities, for one of
the purchases that we have received there was evidence that the customs department did open up our package and do the part that was there. there's no evidence as to what actually occurred as a result of that review, but it was stamped as being opened by our customs department. >> thank you. dr. persons? >> thank you, senator. in terms of the trusted foundry we are aware of the program, although again in the scope of this investigation the analysis of what the trusted family -- trusted foundry would be appropriate is just beyond the scope of her current work. so we don't have any information in to share with you at this time. >> it seems like it is a good model. >> sure. and in terms of the cbp is the same thing. we didn't evaluate cb peace process. >> mr. sharpe? >> senator, the trusted foundry program, as a nation before it really is not something that is part of what's available to
independent distribution. that would be where government is getting dragged with trusted foundry. i really wouldn't have much to say there. with regard to the redaction i completely agree with being able to provide the component manufacture with as much information as possible from what is being seen at the borders right now. i will say that the most recent counterfeit report that we have released had a part in it that if the date code was correct in stead of being incorrectly stated, it would have most likely passed the scrutiny of a photograph from the component manufacture as well. so that's the level of difficulty they are currently facing. as far as the word trusted with regards to independent distribution, what we need to do is we need to get a group of trusted distributors who are required to do over and above a
significant amount of testing, have the abilities to do so. that is one of the biggest problems we have out there right now is there are lots of people are in business, need to be in business, but they do not have the capabilities that are required to mitigate counterfeit parts as we see them today. there are some that do, but we need to identify who they are and use them. and let the other ones who do not have that ability what they need to do to get up to that level as well. >> thank you. thank you, mr. chairman. >> thank you very much, senator collins. senator chambliss? >> thanks, mr. chairman. mr. hillman, i will direct his first question to you, but if anyone else has a comment i would appreciate it. what indication do we have the chinese government is complicit in this counterfeiting operation? >> as part of our investigation we have contracted with vendors
to supply us part numbers, sometimes legitimate, sometimes totally bogus. and have found that they were willing to supply those parts. to the extent to which the chinese government itself is complicit in these activities, it's not a part of our investigation although it appears clear from the presentation from mr. sharpe that those activities are being undertaken in the open. >> mr. sharpe, i assume that from what you said and what was just dated by mr. hillman -- just stated by mr. hillman, you said i believe 40% i believe of the part you saw in the marketplace our estimate to be counterfeit or. we've notified the chinese basically of a. they have done nothing. is that your indication that the chinese government is complicit in this? >> i would have to say that the local businessmen who
accompanied me, i am working off of what he said as far as the percentages go. i've heard also disinformation flowed around from other folks as well, that is as good as my information gets with regard to that, as far as just with a accurate percentage number is. regarding the chinese government knowing about this, it would be basically impossible for them not to know what is taking place in this marketplace, and also in the nearby area. it cannot be missed. >> mr. hillman, your report was focused on the defense industry, and all of you have spoken with reference to the. i assume this is prevalent every other agency in the federal, just as well? >> yes. counterfeit parts and other items that are produced in a counterfeit basis is something impacts as long. >> and mr. toohey, that would be the same for individuals going on the internet and purchasing items such as this, is that
correct? anyone who goes on the internet who buys these products will be subject to the same potential for purchasing counterfeit parts. >> absolutely, senator, this is an enormous problem that affects a broad range of industry and individuals from health care to automotive systems the airplanes, mission-critical and non-mission critical. unfortunately, the biggest incentive is to sell into the most mission-critical, most mission critical systems because that's where the highest markup for these counterfeiters is. but it's a broad problem affecting many industries, and it's a growing one, senator. >> in january 2008 timeframe, a counterfeit chip was found in an f-15 fright -- flight control at robins air force base. and thank goodness it was found by the folks at robins before it
was ever installed. subsequently there were another three or four chips that were found to be counterfeit. do any of you have any information relative to that particular issue? >> no. >> okay. what other resources are there out there, other than the chinese, that we know are counterfeit, counterfeit operators? what other countries are the potential resources? >> we've seen the dod, department of commerce report, and it shows that there's many other countries that are involved in counterfeiting. there certainly is, the vast majority is coming out of china. we've got counterfeiters right here in the united states without a doubt right now who are remarking product, and that's pretty scary to know that. >> for the purchases that we have made as part of his ongoing investigation, we did an
analysis of vendors that were made available, willing to supply the parts that we requested. and 79% of the responses came from east asia. the remaining 21% were from central asia, europe, north america and the pacific islands. >> staggering. mr. hillman, i listened to your description of what i basically guess you would call a sting operation that you set up. and also noted in a press report last month about a lady and her mother in bakersfield, california, just creating a company that just built it out of nowhere and started, got on some approved list, started delivering parts to the department of defense, and over a period of three or four years sold, according to this report, 2.7 million dollars worth of parts were purchased and sold to
the department of defense, and they just cut them off the internet. just went and got numbers. it turned out a number of them were counterfeit. action has been taken, but i am astounded that you could carry out that operation with the department of defense. and i look at it as certainly a problem on the other hand, but there's a problem on our end, too, with respect to how these companies like the company you created are able to get on that list. what sort of recommendation would you have for us to make in terms of how we address that issue? >> in our investigation we attempted to obtain membership on three different internet trading platforms. each of the three platforms appear to have a varying degree of validation -- >> about 15 minutes or so left in this hearing. we will leave it at this point. you can see it in its entirety
on our website at c-span.org. look for the c-span video library. the u.s. it is about to gavel in to start their day. first that it will be general speeches for about an hour and 15 minutes before they get legislative work underway at about 10:45 a.m. eastern. lawmakers will take up her resolution expressing disapproval of the fcc's net neutrality rules. about four hours of debate on that and then they will resume work on repeating the 3% tax on contractors. now live to the u.s. senate floor here on c-span2.
senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. almighty and everlasting god, increase our faith, hope, and love. give our lawmakers more faith to trust you when the skies are dark and to believe that in everything you are working for the good of those who love you. give them more hope to refuse to despair, to accept disappointments without cynicism, and to experience failure yet try again.
give them also more love to be loyal to you, to persevere though pressed by many a foe, and to do unto others as they would have others do unto them. we pray in your merciful name. amen. the presiding officer: please join me in reciting the pledge of allegiance i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., november 9, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing
rules of the senate, i hereby appoint the honorable kirsten e. gillibrand, a senator from the state of new york, to perform the duties of the chair. signed: daniel k. inouye, president pro tempore. mr. durbin: madam president? the presiding officer: the senator from illinois. mr. durbin: madam president, following leader remarks, the senate will be in morning business for 70 minutes with the republicans controlling the first 40 minutes and the majority controlling the final 30 minutes. following morning business the senate will consider the motion to proceed to the senate joint resolution regarding net neutrality. upon the use or yielding back of time the senate will resume debate on h.r. 674, the 3% withholding repeal act with the veterans jobs amendment. madam president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll.
mr. mcconnell: madam president? the presiding officer: the republican leader. mr. mcconnell: i ask consent that further proceedings under the quorum call be dispensed with. the presiding officer: without objection. mr. mcconnell: later today the senate will take up s.j. res., senator hutch hutchison's disapproval of the regulation of the net neutrality regulation. i want to thank senator hutchison's leadership on this important issue. while we understand the importance of the internet, i think we can all agree the growth of the internet in the last 15 years is an american success story that occurred absent any, any heavy-handed regulation here in washington. we should think long and hard before we allow unelected bureaucrats to tinker with it now. everywhere i go in kentucky, i hear from businesses large and
small that they are struggling to comply with the mountains of rules and regulations coming out of washington. at a time when the private sector would like to create jobs and grow the economy, it seems like too many here in washington want to create regulations and grow government. and so like many americans, i was heartened two months ago when the president came to the capitol and laid out a very specific test for judging the merits of federal regulation. like most of my colleagues, i applauded when the president told us that -- quote -- "we should have no more regulation than the health, safety and security of the american people require. every rule should meet that commonsense test." but as it turns out the f.c.c. didn't get the memo. the net neutrality regulations we're debating today clearly fail that commonsense test. there aring -- they are a solution in search of a problem. in an overreaching attempt to
fix the internet when the internet is not broken. according to the f.c.c.'s own data, 93% of broadband subscribers are happy with their service. and if americans weren't happy with their provider or felt that the provider was favoring some forms of content over others, they could switch providers. but now the f.c.c. says its regulations are necessary because of what might happen in the future. what might happen in the future. if broadband providers have incentives to favor one type of content over another, despite the fact that after 15 years -- 15 years -- there's no evidence of this occurring in any significant way. if internet providers were so interested in doing this, wouldn't they have done it by now? instead, the f.c.c. has exceeded its authority to grow the reaches government under the guys of fixing a problem -- guise of fixing a problem that
the doesn't exist. 15 years ago the thought that you could read a book, watch a ball game and video conference with your kids all on a device the size of a magazine, we would have all thought was something from science fiction. today it's reality. the internet has transformed society precisely because people have been able to create and innovate largely free from government intrusion. businesses are free to invest and grow on the internet safe in the knowledge that consumers and technology will determine their fate, not the whims of washington regulators. this investment in broadband infrastructure is the cornerstone of our high-tech economy, which employs nearly 3.5 million americans. but the f.c.c.'s regulations could jeopardize the future growth by dictating what sort of return businesses can earn on their investment. as my colleague, senator
hutchison, and i recently tphoetd, lower returns -- noted, lower returns means left investment which in turns means fewer jobs. some estimates suggest we could lose 300,000 jobs as a result of these rules. thankfully it's not too late to act. a bipartisan majority in the house voted to overturn these rules earlier this year. the senate should take the opportunity to do the same. in order to protect the growth of the internet and its ability to create jobs of the future, i would encourage my colleagues to support the hutchison resolution. and, madam president, on another issue, when something good happens here in the senate, i think it's important that we all acknowledge it. so i want to start this morning by thanking our friends on the other side for finally agreeing
to join us and making progress on the nearly two dozen bipartisan jobs bills the house has already passed. and i want to urge them to keep at it, to keep pressing ahead with jobs bills both parties will actually support. that way we'll show the american people that we're capable of accomplishing something together up here when it comes to jobs. for months, house republicans have been executing on a plan to identify ideas that would not only help spur private sector job creation but which would also attract strong, bipartisan support. and for weeks i've been urging the democratic majority here in the senate to take these bills up so they can become law. and this week senate democrats finally agreed to move ahead with two of these bipartisan proposals: a repeal of the 3% withholding rule that will use the burden on government contractors and a veterans bill that not only helps returning servicemen and women find jobs
but which also helps those who hire them. neither of these bills is going to solve the jobs crisis but they'll help a lot of americans who stkaoefrb -- deserve it and may go a long way in showing the american people there's plenty we can agree on up here. my suggestion is now is that we don't stop there. let's keep it up. let's take up and pass the rest of the bipartisan jobs bills house republicans have already passed with bipartisan support right across the dome. i've highlighted one of those bills already this week, one that makes it easier for businesses to raise the capital they need to expand and create jobs. this morning i'd like to highlight another. the shareholder registration thresholds act, h.r. 1965, a bill that increases the number of shareholders that are allowed to invest in a community bank before that bank is required to shoulder costly new burdens from the s.e.c. for three years we've been
talking about the urgent need for growing businesses to have access to capital so they can expand and hire. and yet, because of an outdated law, the smaller community banks that want to make loans to help these growing businesses are subject to burdensome regulations that shouldn't even apply to them. h.r. 1965 would increase the threshold of shareholders that trigger the requirement from $500 to 2 thousand thoufplt a companion bill in the senate that would do the same thing is cosponsored on the republican side by senator hutchison among others and on the democratic side by senator pryor among others, and senator toomey has a bill, s. 1825 to expand this legislation by applying it to businesses other than banks. we should take these bills up in the senate and pass them as soon as possible with the same show of bipartisan support the two parties mustered on behalf of h.r. 1965 last week.
like the bipartisan house-passed jobs bill i highlighted yesterday, h.r. 1965 passed the house last week with nearly unanimous support. the vote was 420-2. with 184 democrats voting in support. only two people out of the entire 435-member house voted against the bill. the president's jobs council has endorsed the idea, and top democrats have been vocal proponents of this legislation proposed by house republicans. here's house minority leader congressman hoyer on h.r. 1965 just last week -- quote -- "we need to see throepbgd small businesses and homeowners, but they're hamstrung in their attempt to raise capital by outdated s.e.c. registration requirements. i completely agree with steny hoyer." here's congresswoman sheila
jackson lee. small businesses need access to loans and other lines of credit in order to build their businesses and create jobs, she said. before us is a measure that would allow small businesses to get the support they need. i completely agree with congresswoman sheila jackson lee. look, it's not every day that congresswoman lee and i agree on legislation, so i think we should lock this down. let's pocket another bipartisan accomplishment right here and help the job creators who need it. this is precisely the kind of approach we should be taking here in the senate, putting aside these giant partisan bills that democrats know republicans won't support and focusing on smaller proposals that can actually garner support from nearly everyone and make it on to the president's desk for a signature. these are small steps, but they're progress. let's keep at it. madam president, i yield the floor.
the presiding officer: leadership time is reserved. under the previous order, the senate will be in a period of morning business for 70 minutes with the senators permitted to speak therein for up to ten minutes each, with the time equally divided and controlled by the two leaders or their designees with the republicans controlling the first 40 minutes and the majority controlling the final 30 minutes. a senator: madam president? the presiding officer: the senator from nebraska. mr. johanns: thank you, madam president. madam president, i ask unanimous consent to enter into a colloquy with my republican colleagues, senator grassley of iowa, senator coburn of oklahoma, for up 230 minutes. the presiding officer: without objection. mr. johanns: recently, "the des moines register" reported that an iowa-based insurance company has decided to exit -- exit the health insurance mark market, abandonin abandoning dio
individuals and families. what's the net effect that have? 35,000 policyholders will lose their insurance. it calls to mind that famous promise by the president: quote -- "if you like your plan, you can keep it." unquote. now, the story doesn't stop there. it has an even more profound impact on the lives of real people. the impact goes on -- 110 employees will lose their job. 70 of those employees are in nebraska. that calls to mind speaker pelosi's broken promise: quote -- "the law will create 4 million jobs, 400,000 jobs almost immediately." unquote. the driving factor for all of this is a health and human services regulation required by
the health care law which micromanages how insurance companies can spend their revenues. now, unfortunately, this job loss in nebraska is not an anomaly. a recent survey of nearly 2,400 independent health insurance agents and brokers from all over came to this conclusion, just one month after this h.h.s. regulation took effect, more than 70% had experienced a decline in their revenues. and, more shocking, nearly 5% had lost their jobs. the government accountability office reported that most of the insurers they interviewed were reducing individuals'
commissions. now, these are not the big insurance companies that were railed against in the health care debate. these are not the big insurance companies that are being squeezed. the good folks that are being squeezed are the mom and pop agencies that we find on main street throughout the united states. yes, these are the folks that we go to to support the local football team, the local high school, the local 4-h club, whatever the civic cause may be. and yet, with unemployment hovering around 9%, the health care law puts the hammer on these people. i have reached the conclusion long ago that the health care law is bad for job creation, and it's bate bad for keeping your . ththe des moines-based c.e.o., b
loss according to him was -- quote -- "a fairly predictable consequence of the regulation." unquote. u.b.s. investment research called the health care law -- and again i'm quoting -- "the biggest impediment to hiring which has the added drawback of straining state and federal budgets." unquote. the national federation of independent businesses said -- and i'm quoting again -- "small business owners everywhere are rightfully concerned that the unconstitutional new mandates, countless rules, and new taxes in the health care law will devastate their businesses and their ability to create jobs" -- unquote. what we are seeing with this law is a massive amount of overregulation. according to a recent wells fargo-gallup smal-gallop surveys
are the most important problem facing our business owners. if we just focus again on the health care law, that legislation alone has resulted in 10,000 pages of new federal regulations and notices. 10,000 pages. how could any small business comply? the employer mandate penalizes employers for growing. it is as simple as that. it forces employers who do not provide acceptable coverage to pay a penalty of $2,000 per full-time employee. but, you see, the penalty is applied to firms with more than 50 employees. and, as a small business owner in the belleview, nebraska, area recently explained to me, "i'm not growing my business over 50 employees. i don't want to deal with your
health care law." well, as i mentioned, this discussion starts at least today with that article in the "des moines register." and with me today is the very respected senator from the state of iowa, senator grassley, and you'd just ask senator grassley, what impact do you see arising out of this health care law in your state and, even more broadly, across this country? mr. grassley: i think, number one -- thank you, senator johanns for your leadership in this area, and you've spoken on regulations quite regularly on the senate floor and also in our caucus, and i thank you for your leadership in that area. number one, i would say, there's a certain irony between a president who's going around the country now and talking about, we got to pass legislation to create jobs. at the very same time, as you
demonstrated in your remarks, there is a a health care law being instituted that is making people unemployed. there's also a certain irony in what the president does and the secretary of h.h.s. does with what speaker pelosi said at the time the bill was up, you know, we've got to pass this bill to see what this bill really does. well, now we're finding out really what it does. and people don't like what it does. and you spoke about regulations causing this unemployment. and you spoke about 10,000 pages of regulations. that's probably 10,000 pages of regulations out of the 66,000 pages of legislation -- or of regulation that we've had just this year, just this year. and 10,000 of that deals with health care. but think about the other 57,000 pages that deal with other pieces of legislation that is a problem for small business,
particularly small business. i guess it is a problem for all birks but tuckly small business. -- i guess it is a problem for all business, but particularly small business. i guess so far only a few regulationregulations have been. people can read this 27-page bill and understand what's in it. most of them understood what's in it before speaker bellowcy said we got to pass it to find out what's in it. in this bill there's 1,693 pages -- or, no -- let me back up. there's 1,693 delegations of authority to write legislations. so if you got 10,000 pages so far just based upon the few regulations that have been written, just think what it's going to be like when all of the pages are printed for the 1,693 regulations that are done. so, i think we're just seeing
the cap of the iceberg so far had this legislation. the damage that it's done to employment and lack of job creation is just starting. that's my comment on what you do. i have some remarks i'd like to make, if it's okay with you. but i thank you. and if you have to go to a committee meeting, i understand. this is not the first time that this situation has happened in iowa, and it's coming at a time when people need stability. american families are struggling to put food on their tables, pay their utility bills as winter arrives, and purchase health insurance, as costs are skyrocketing. in other words, the president has promised pass this legislation, it's going to keep health care premiums down. why, that's misleading people. and at a time when, as senator
johanns said, another promise made was, if you like what you have, you're going to be ail to keep it. well, we've got -- i don't know exactly the figure; i've got it here coming up -- there's a figure of several thousand meme in our state that aren't going to be ail to keep the health insurance that they like and they already have because of this company closing down individual policies. unemployment continues to hover around 9%, and many americans are unemployed. here we've got a health care bill that's causing more people to be unemployed as well as not keeping the health insurance they want. with the economic situation that our country is face, congress must reexamine its actions and realize the errors through partisan votes that are made because of partisan votes. and this bill was an entirely partisan piece of legislation,
unlike most social contracts in america that have been passed, like social security, comairks and medicaid, civil rights legislation. those were bipartisan pieces of legislation because tbas felt that when you're making this difference in america, you ought to have a broad consensus that major changes like this ought to be made. but in this particular case, it was very partisan. so i want to go over what senator johanns said about "the des moines register" article. the american enterprise group, an insurance company participating in the individual health insurance markets in iowa and nebraska, are leaving the market. this action shows the importance of repealing and replacing the health care overhaul passed by democrats in congress, signed by the president last year, before the situation would deteriorate even further. just think what it's going to be like when we get the rest of these 1,693 delegations of authority to the bureaucracy to
write regulations. american enterprise -- that company -- notified 110 employees in iowa and nebraska that they'll lose their jobs sometime during the next three years. american enterprise is leaving the individual health insurance market as a result of the instability caused by the implementation of this health care reform bill. american enterprise stated that it will no longer sell individual health insurance policies because of the regulatory environment created by the health care reform bill. thithis is an isolated incidentr iowa because the financial principle rule left the small insurance group in 2010. and principal financial is one of the major financial groups in the united states. but still they could not find it to be competitive to stay in the individual market. this has cost them -- many eye y
iowans their jobs while leaving them to choose from health insurance plans in a health insurance market where there is less and less regulation. the culprit is the medical loss ratio regulation of this legislation. this regulation requires insurers to pay a certain percentage of premiums and claims. and i know supporters will defend the regulation as -- quote, unquote -- q. "keeping insurers in check." but the real-world effect is to force insurers to leave the market thereby reducing competition and choice available to consumers. just what the president promised that we're going to have competition, keep price down and people are going to have choice, they're going to be able to keep what they have if they want it. but that isn't a promise kept. that turns out to be a falsehood. the small group of individual markets happen to be very
volatile. that's the problem. insurers bear risk and they set their premiums accordingly. insurers are making a rational decision to get out of the market because the risks have become too great. competition is reduced, costs rise. once upon a time the president promised americans that if they like the insurance plan they have, you can keep it. this is more evidence that promises ring -- that that promise rings hollow. this recent planned pullout will leave 35,000 individuals without insurance plans that they have grown accustomed to. forcing people to choose a difference insurance option can lead to higher costs and may limit the health care accessibility that these individuals have depended on for years. this is aespecially detrimental when these individuals have preexisting conditions or acute, chronic disease. the president specifically promised that if these people want to keep their health care coverage, they would be able to do it with the passage of that
law. this is just one of the many examples on how this overhaul has led to broken promises made by the president when pushing through the passage of this legislation in a partisan way. these committees -- or, these problems will certainly continue as more regulations are written. the congressional budget office expects people in the individual market to see an average of 10% to 13% rise in premium costs, and solely based on the passage of the health care law. does that increase accessibility or affordability? no. not only has the health care overhaul caused health insurance companies to leave parts of the health insurance markets and health insurance costs to increase, it also put an added burden on employers. no employers will no longer offer their employees health care coverage. higher taxes and mandates put on employers by new health care law have left many employers without resources to maintain current
coverage for family members of their employees. the negative impact of this legislation is having on large employers and those insured by employers is demonstrated by the national business group on health. in its recent annual survey, overall plan costs for larger employers are expected to rise by 6% in 2012. the national business group on health also notes that seven out of ten employers will lose their grandfather status, meaning that employees will lose their current health care plan and employers will be subject to additional regulations, according to the same survey, three out of ten employers are unsure if they will continue to insure employees due to the health care bill. other employers will increase the employee's share of insurance premium and many employers state that they will likely lower the level of health
care coverage offered to their employees. wal-mart, as example, will not allow many of its new part-time employees to receive health care insurance through the company. many of these workers are already underemployed. they work hard yet don't always have adequate resources to purchase health insurance on their own, especially as costs and individual insurance markets continue to increase due to the new law. additionally, many businesses are simply dropping coverage for their own employees because of the extra costs incurred in the legislation. it's more affordable for some employers to drop coverage for their employees and pay the fine associated with the employer mandate. an employer must provide health insurance for their employees if they have more than 50 employees or 50 full-time equivalent. employers who are required to insthaour employees -- to insure employees will be fined $2,000
per employee who seeks health insurance through one of the exchanges created under the health care overhaul. and any employer-sponsored plan must meet the definitions of h.h.s. on what an adequate plan is. this requirement will increase insurance costs for employers and employees when they must upgrade health insurance benefits in order to meet the standards defined by the department of h.h.s. forcing employers to provide health insurance when they have a tough time hiring new employees just adds to the burden employers are facing in a struggling economy. employers will likely pay their increased health insurance costs by reducing employee take-home pay or by increasing the employee's share of health insurance premiums. also, employers will continue struggling in future years as the federal government increases year by year the requirements of health insurance benefits needed to avoid a penalty.
furthermore, employers already faced with economic uncertainty have to deal with the government regulations that continue to change adding to uncertainty. h.h.s. rule released last november allows fully insured group plans to switch insurance providers as long as the insurance benefit provided to the beneficiaries remain comparable. however, this is only for group plans that switch after november 15 last year. h.h.s. wrote this new rule so more group plans can find affordable coverage and shop around for similar coverage at cheaper rates. but the group insurance plan carrier was changed before -- if the group plan carrier was changed before november 15, the plan would lose grandfather status and then be subject to a whole bunch of new regulations. ironically, what created the need for this new rule was
another rule that the president's administration and h.h.s. crafted june last year that stated plans would lose their grandfather status if they switched carriers. this chaotic situation shows what happens when the government is given more authority to regulate the health insurance market. madam president, what we have here is a mess. we need to put a halt to the implementation. we need to repeal the law and start over again with commonsense hraougss. we need to move away from the regulatory and bureaucratic nightmare that is costing americans their coverage and too many americans their jobs. and with 10,000 pages of regulations at this point, just think what it's like when all 1,693 regulations get read. i yield the floor. mr. johanns: i thank senator grassley for his explanation of
what this law is doing and the impact that it's having. today of course we're starting our discussion with the article from the "des moines register" which talked about the regulatory impact, but we can't forget that there's other pieces to this law that have just as severe an impact. i'd like to spend a minute or two here talking about the destructive taxes that are in this legislation. when you add it all up, the new health care law basically require new taxes of about $500 billion. not to pay down the national debt, not to solve the nation's debt woes, but to create a new entitlement. the treasury department's inspector general for tax administration has looked at the impact of the health care law and the tax code, and he said this -- and i'm quoting -- "loss the largest set of tax law
changes in 20 years." unquote. that's no small undertaking when you think about all that has happened over the last couple of decades that we ended up with an impact on the tax code that is the largest set of tax law changes in 20 years, according to the treasury expert that looked at this. there are 42 separate provisions adding to or amending the internal revenue code in the health care law. so much of this law was put together in the last days of this debate, and people were scrambling around trying to read it and understand it and get information out to their constituents and speaker pelosi was saying, we'll probably just have to pass this law to figure out what's in it. now we are figuring out what's in it. it's so much more than a health care law. 42 separate provisions add to or
amend the internal revenue code. "the boston globe" has weighed in to this -- weighed in on this. they point out that the 2.3% excise tax on medical device suppliers, according to "the globe" will force industry leaders to lay off workers and curb the research and development of new medical tools. unquote. there's no question about it, when you add up the tax law changes, the impact from a regulatory standpoint and the other provisions of this law, this is not going to result in the promised jobs that speaker pelosi spoke of. it's a job killer. if you look at what this law is doing, it will actually shrink the labor force, actually create a disincentive to work or to
receive a pay raise. i referenced earlier in my comments a small business owner in the belleview, nebraska, area. i was sitting at a business round table a little more than a year ago, and we were just going around the room. and i was listening to small businesses describe to me some of the challenges that they face. this woman, this small business owner said to me, she said, you know, mike, we have studied this health care law every which way we can. i am right on the edge of having 50 employees. i am told that figure over 50 employees, i am not subject, to all the ramifications of the health care law. after looking at this, i have decided i will not grow my business beyond 50 employees. i do not want to deal with this health care law. well, her discussion with me has stuck with me all of these
months. why is it that washington would actually pass legislation that would discourage her from hiring additional employees to grow her business? it makes no sense whatsoever. why are we here in washington creating a disincentive for the small business owner? why are we costing americans jobs? congressional budget office has looked at this legislation, and they've come to the conclusion that the american labor supply will be reduced by 100,000 workers. the c.b.o. quote is this quo the law will encourage some people to work fewer hours or to withdraw from the labor market. unquote. the more we learn about this health care law, the more wedom realize that this is flawed
policy. and it passed and it was signed into law by the president of the united states. but it goes beyond flawed policy. it impacts real people who are trying to make a real living. my comments today started with the story about 50 nebraskans that lost their jobs or are about to lose their jobs because of the health care law. and i am concerned, mr. president, that it is not going to stop there. that as employers are more and more burdened with the thousands of pages of regulations, they will come to realize that their best strategy is to try to figure out how they deal with these new requirements, and they will pull back on hiring, which is exactly what we don't want to have happen in this economy. with that, mr. president, i conclude my remarks and our
colloquy today. i yield the floor. and i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: a senator: mr. president? the presiding officer: the senator from wyoming is recognized. mr. enzi: i'd ask the quorum call be waived. the presiding officer: without objection. mr. enzi: thank you, mr. president. i'd also ask unanimous consent that the senator from illinois and the senator from kentucky be allowed to enter into a colloquy
with me, with the time that we have allotted. the presiding officer: without objection. mr. enzi: okay. i'm going to talk about a problem that i've tried to solve for 14 years, and today i think we have a new solution and the solution. this has to do with sales taxes that are not being collected at the present time. it's a little loophole in the tax law. i used to be a retailer, and i never thought that it was fair that i had to collect the sales taxes but the people from out of state didn't have to collect the sales tax. i used to be a mayor. this bill that we have is a jobs bill and an infrastructure bill. a lot of people don't realize that the sales tax helps pay for schools and police and firemen. they may not realize that it pays for infrastructure like streets and sewers.
i always tell people that it's a little tough to flush your toilet over the internet. but this bill would allow states -- not require states -- to be able to have the out-of-state online sellers, provided they sell more than $500,000 in a year, to collect the sales tax. i've also been a state legislator. i can tell you as a state legislator, we never intended to pass a law that would just force the people, the retailers on main street who buy the yearbooks and all the community activities, to be the ones who collect the tax. and anybody from out of state or out of town not have to do it. so this cleans up that little problem at the same time. does it make much of a difference? yes. we're being asked as congress to give money to the states for their teachers and their firemen
and their infrastructure. it's because there is a decreasing amount of revenue going to them by sales taxes that are uphold. people may not realize it but if they buy something online, if the tax isn't collected, they still owe it. this is not a new tax. it's a tax already on the books. no legislator ever intended for it to be just for main street retailers. as a result, we have a number of support letters for this new bill, and i hope everybody will take a look at it. they can get to it online. here are some of the groups. i'd ask unanimous consent that these letters be made part of the record. the presiding officer: without objection. mr. enzi: i have one from the national conference of state legislators, one from the national association of counties, the national league of cities, the federation of tax administrators, the national retail federation, the retail industry leaders association,
the international council of shopping centers, the simon property group, incorporated; the neiman marcus group; the jewelers of america; best buy; and i want to read the one from amazon.com because they are one of the world's largest online sellers. and in the past they have opposed previous versions of the bill, but they think that we've got this one right. they say "thank you very much for your legislation on interstate sales tax collection. amazon strongly supports enactment of your bill and will work with you, and the states to get this bipartisan legislation passed. it is a win-win resolution and as analysts have noted amazon offers customers the best prices with or without sales tax. if enacted, your bill will require states to require out-of-state retailers to collect sales surtax at the time of purchase and remit those taxes on behalf of customers and
it will facilitate collection on behalf of third party sellers. thus, your bill will allow states to obtain additional revenue without new taxes or federal spending and will make it easy for consumers and small retailers to comply with state sales tax laws. amazon is grateful for your hard work on the issue and we look forward toworking with you and your colleagues in congress to pass this resolution." we have a number of others that we will also list. now, this is a bipartisan bill. the original cosponsors are it are five democrats and five republicans. a key earn in this has been the senator from illinois, senator durbin, who has turned in a previous version of the bill, and we encourage you to take a look at that but to see the difference that there is in this new version is a very passible bill. so at this point he had a i'd ar durbin if he had some comments to add, because he's been
instrumental in making this and realizing the plight that th the retailers are in. mr. durbin: thank you. thank you to my colleague from enzi. i want to give fair warning to all who are witnessing debate that bipartisanship is about to break out on the floor of the united states senate and you can witness it because we have a bipartisan effort led by senator enzi, who has been dedicating his life in public service as a former retailer to be sensitive to the needs of main street and small business. for years he worked with our former colleague, senator byron dorgan of north dakota, and they did their best to pass this legislation. when senator dorgan retired, i approached senator enzi and said, i'd like to join new this effort. i'm honored to be on the floor with him and our mute aol friend, senator alexandria, in this combined bipartisan effort to deal with an issue that i think is essential to fairness
in our economy in helping small businesses thrive, which is the key to economic revitalization. if you ask the small businesses in high home state of illinois what they want, it is not a big handout from washington nor the special attention. frankly, they ask for a level playing field. let them compete. what senator enzi has said is that many retailers in my state and his and every state are finding it more difficult to compete because they have to rent a building or buy one. they have to pay the property taxes. and they're of course going to pay utility bills and local taxes that might be generated because of their sales, either to the state or local government. and in each instance they are investing back in the community and state that they live in. that is part of the basic understanding we have in this country, that we are in fact in this together and that we need to cooperate. so that the businessman down the street, who is selling something in a store, is also at the same time supporting the local
community to make sure that it has traffic lights and make certain that it has police protection and utilities and streets and cu curbs and gurts d everything that goes with t but there's been a new phenom flay that's going on and thats internet. internet sales are an amazing entity where we can literally click a mouse and buy a product that will arrive several days later at a home or business place. but it also has invited and inequity, an unfairness that we address in this bill. we are not creating any new taxes in this bill. i say to my friends on both sides of the aisle, that is not our intention, nor does this bill does that. what it does is to provide a mechanism to collect existing tax that's owed under existing law. period. and we do this in a fashion that senator alexander will describe
in a moment that will capitalizes on the technology and software available today to make this a process that is not burdensome and does not slow down commerce in any way. mr. president, i've recently went to bloomington, illinois, and a number of other communities in my state and set down with local retailers and had them tell the stories, in many cases depressing stories, about what they're going through. in one instance this fellow sells camping gear and outdoor wear and he also sells some snorkeling equipment and some ski equipment. and it is minority unusual now for he and others who are selling this type of sporting equipment to have local customers come in and look for the product they want, actually getting a fitting to make sure they get the right size and leave to order it on the internet so they can escape any sales tax liability. well, that isn't fair to the local merchant. and it certainly wasn't the
intention of illinois or any other state to impose a sales tax just on those businesses that exist -- physicallyies exist in -- physically exist in our states. so this bill applies the sales tax to businesses across the board. states have to decide they want to move into this field and use this opportunity. i think that's the way to approach it. some 24 states have already signed up for the streamlined coalition which allows them to make this happen. other states by complying with this law and passing a local state law can do the same. it's their option. we don't goas or demand it. it's their option, if they choose it to use existing sales tax and to take the initiative at the state level. as senator alexander has reminded me many times, it is a states' right issue, it is a should be, and that's what we're knocfocusing on in this legisla. i think it is an issue of
fairness and i think it goes beyond what we're facing today in terms of the disparity between democrats and republicans. we are coming together, coming together on behalf of tax fairness, coming together on behalf of states' rights, coming together to make certain that small businesses across america have the resources they need to prosper, be profitable and we hope to expand their workforce. we need to create more jobs. i don't think it's unreasonable to expect that to happen as these local retailers become more competitive and more profitable. i might also add that the states that decide to opt in to it will have a source of revenue that hav-- thatwill be helpful to hen difficult times. one of the most impressive supporters he read a letter from, amazon to think that one of the largest, if not "the"
largest online retailer in america endorses this bill. when i think back of all the battles that have been fought in all of the states by amazon when each state tried to address this i think it's telling that they have stepped forward and said, here is a solution that can work. and if the largest online retailer in america or one of the largest feels that way, it should encourage many colleagues who don't want to destroy that part of our economy. and i certainly don't either. so i think this is a positive step in the right direction. i want to thank senator tim johnson, senator boozman, senator jack reed, senator blunt, senator whitehouse, and many others who are going to join senator enzi and senator alexander and myself in this effort to pass this bipartisan bill. let's get this done. let's work together in a bipartisan basis to solve a problem that has haunted us for over a decked, to do it in a fair fashion that -- for over a decade, to do this in fair fashion that does not create any
or taxes but gives states the right to collect the taxes that are already on the book. i yield the floor. mr. alexander: mr. president? the presiding officer: the senator from tennessee. the minority has 20 seconds left. mr. alexander: i ask consent to extend the time -- the colloquy into democratic time? the presiding officer: is there objection? mr. durbin: no objection. the presiding officer: no withouwithoutobjection. mr. alexander: thank the democratic whip for that. i wnt want to congratulate senar enzi and senator durbin. here's what i want to congratulate them for. senator enzi said he came to this as a former mayor, as a former shoe shop owner and as a former legislator. i come as a former governor p and in our constitutional framework, i've always thought it was our business in tefn te e to decide what services we wanted to provide and what taxes
we wanted to pay for them. we have a low tax rate. for me, as i have discussed, is a matter of states' rights. but the most important thing that i think i could say today or that we can say today is i think they've solved the brob this legislation. this problem has been there for a long time. it's had the opposition of conservatives worried about taxes, it's had the opposition of amazon and other online sellers. the supreme court said 20 years ago that it was too complicated for out-of-state vendors to figure out how to collect sales taxes when something is purchased and send it to the state, which is what the main street seller does and maybe that was true 20 years ago. but the supreme court said 20 years ago, it invited us in congress to solve this problem.
and senator enzi and senator durbin, with this legislation, in my opinion, have solved the problem and this is going to happen. and i'm not presumptuous enough to predict what the united states congress will do and what the president will sign, but i think i've been around long enough and i've watched congress enough to say this is going to happen. and if i were governor, if i were an online retailer, if i were a catalog retable, i would make my plans to conduct my business in this way. why do i say that? well, for one thing, times have changed. this morning i got up and looked up the weather in my hometown, so i put in weather 37886 -- that's my zip code -- and back came the information. urchedz the bill that senator dur -- under the bill that senator you are din bends and senator enzi has proposed, the state would have the option of completing creating a system
that amazon, for example, an online sell seller, all they would have to do if i buy a television set, is they put my name in, they put in my zip code, and the software that the state has provided will tell them what the tax is and will even electronically transfer the tax money back to the state. in other words, amazon will do the same thing that the appliance store in tennessee will do. that's what we intended to happen. when we passed a sales tax in tennessee, i wasn't around then, but -- i was around when it's been raised -- we didn't intend to exempt some people over others. we didn't exempt -- intend to subsidize some businesses over others. we made a general decision that when you buy things in tennessee, we're going to pay for them primarily with a sales tax. we have a local sales tax and we have a state sales tax and that's our right to decide. some of the opposition in the past has come from conservative
groups and it was important to -- just yesterday, to see the president of the american conservative union wrielt a very strong letter in -- write a very strong letter in support of a house version of this same bill. and i talked with him yesterday, mr. al cardness, a businessman from florida. he is reviewing our bill. 10 years ago william f. buckley wrote about this problem and said it was a loophole that needed to be solved. and when states decided to subsidize some taxpayers over others and some businesses over others, that that was not good conservative philosophy. so i think on all sides, when you have amazon supporting in the strong letter that senator enzi read, when you have the president of the american conservative union on the same day announcing his support for the same principles, i think you've solved the problem. what we've seen over the last 20 years is a great many voluntary
agreements between companies like amazon and other companies that sell online or sell by catalog to say, okay, now that we've figured out how to do it, it's fine with us. as amazon just said, they're in business to compete and they can sell their goods, they claim, cheaper online than they can buy them in senator enzi's store in gillette, wyoming, maybe they can, maybe they can't. but at least they'll have a level playing field in both the store in wyoming and gillette, wyoming, and the seller online will both do the very same thing. they'll collect the sales tax that's already owed from the purchaser they'll send it to the start which has been the way things have worked for a long time. so this is an issue about preserving the state's right to collect or not to collect its own sales tax. it's about closing a tax loophole. it's about stopping the
subsidization of some businesses over others, of some taxpayers over others. as -- here's what william f. buckley said about it -- and i'll conclude my remarks in just a moment. "the mattress maker in connecticut doesn't like it if out-of-state businesses are in practical terms subsidized. that's what the nontax amounts to. local concerns are complaining about traffic in mattresses and books and records and computer equipment that ordered through the internet come in, so to speak, duty-free. of course governors and legislators are up in arms. according to the national council of legislators, this loophole costs states $28 billion. tennessee could use this known ward off a state income tax which we don't have and we don't want. wyoming could use the revenue to reduce its property tax. other states might reduce rising college tuitions or they might reward outstanding teachers. this has been a problem for the last 20 years.
but senator enzi and senator durbin with their legislation have solved the problem. so i'll stop where i started. this is not a new tax. it's an existing tax. it's not on the internet. it's on all sales. and what senator enzi and senator durbin have done, have solved the problem. and i predict that because of the voluntary agreements and the ease of out-of-state vendors doing the same thing that main street vendors do that, very soon we'll eliminate these subsidies, close this loophole, and i congratulate them for their years of work in this area. i'm happy to join ten senators, five republicans, five democrats in cosponsoring this legislation. mr. durbin: would the senator yield for a moment? mr. alexander: oh yes. mr. durbin: i'd like to go on the record seined senator alexander -- and say senator alexander doesn't give him
enough credit. he's been an integral part in putting together this bill. i want to thank him for the bipartisan effort to put this bill together. i share his feelings. i think we finally found that sweet spot and we can pass this bill. mr. alexander: i thank the senator from illinois. i wonder if i might ask consent to include in the record following my remarks the letter al cardin, the head of the conservative union, the essay by william f. buckley and a letter from the governor of tennessee endorsing the enzi-durbin legislation. the presiding officer: without objection, it will be included. the presiding officer: the senator from rhode island. mr. reed: are we in morning business? the presiding officer: the senate is in morning business. mr. reed: thank you, mr. president.
let me also commend senator enzi, senator durbin and senator alexander because i too am a cosponsor of this legislation and i think it does represent a thoughtful and bipartisan approach to providing resources to local states and communities so they can carry out the very challenging issues of local government. and i'm not surprised that senator alexander would be a key element in this product. but both senator enzi and senator durbin deserve to be complimented. thank you for your leadership, gentlemen. i rise specifically to speak in strong support of vow to hire heroes act of 2011. this legislation incorporates key components of the america's jobs act and other bipartisan proposals designed to help veterans find jobs, including the hiring heroes act. i am a proud cosponsor of this legislation also. these are commonsense policies that congress can and should pass immediately. we are in the midst of an unemployment crisis. that is obvious to every
american. and it is a growing problem that is sapping not only our economic strength but indeed our sense of national purpose and our morale. the national employment rate has been hoefrg around 9 -- hovering around 9%. that means 14 million americans are looking for work in one of the toughest economies since the great depression. but what is unfortunate, some might even say shameful is that almost a million of those americans looking for work are veterans returning home after valiantly serving our country. the unemployment rate for veterans of afghanistan and iraq is an undefensible 12.1%. it is, represents a significant blow to young men and women who are returning home after serving their country in very difficult circumstances. in 2010, 36% of the afghanistan
and iraq-era veterans were unemployed for longer than 26 weeks. again, that is a shameful statistic. and this unfortunate trend is taking place in rhode island. we have unemployment rate of 10.9%, one of the highest in the nation. we have been unfortunately in that category for almost two years now. but for veterans the rate is 11.1%. they're even doing worse than other non-veterans in the employment market. that's one more reason, by the way, that we should extend the unemployment compensation legislation that's so necessary. i've joined senator durbin, whitehouse, levin, merkley and gillibrand and we proposed to do this with the emergency unemployment compensation extension act of 2011. we still have people coming back from afghanistan. we still have people who are holding on to a job but very well might lose it and need these benefits.
and if we do not pass this legislation, then beginning next january there's a real possibility that they could not be able to get these benefits which are so essential. we have to work together. i think it's a very good example of the work that senator enzi and senator alexander and senator durbin and myself and others have done with respect to this legislation on sales tax. but we have to work across the aisles, particularly for our american and -- american veterans, but also for american workers through throughout this country. again today we have a component of the america jobs act before us. this bill is focused on veterans but the jobs act overall should be passed. we have argued for it endlessly. because it will put americans to work. it is fully paid for. and it will be an investment in infrastructure and other programs that are long-term needs of this nation. this particular legislation before us targeted at veterans
would provide incentives for businesss to hire these veterans, including a tax credit of $2,400 for hiring a veteran who has been unemployed for more than four weeks but less than six months. a $5,600 tax credit for hiring a veteran who has been look for a job more than six months and $9,600 tax credit for hiring veterans with service-connected disabilities who has been looking for a job for more than six months. these incentives will help veterans secure employment and they should be passed immediately. thee veterans deserve our help as they transition from the military service to their civilian careers. they have incredible skills of leadership, diligence and dedication and self-discipline that add to their technical skills and make them incredibly important for the growth of our economy. and they have to have the opportunity to use these skills for the benefit of their
communities as they did to defend their country. this legislation provides critical assistance. first, it would provide an opportunity for military personnel who are leaving active service for transitional assistance, to be in workshops sponsored by the department of defense, department of labor and veterans affairs that will help them write resumes, career counseling and do other things. it essentially provides an additional year of g.i. bill benefits at community colleges or technical schools. it also allows service pheplgs to begin to -- members to begin to seek civilian jobs in the federal government prior to formally separating from the military service. earlier this week i was with the president. we announced these initiatives and more. after that visit to the rose garden, i went up to wall street read military hospital center at bethesda to visit those young men and women who have served
and now who are wounded warriors. trust me, their spirit is undeterred. their commitment to the country. we owe them much more than we could ever repay. and the first payment in that huge debt is passing immediately this week this legislation to help our veterans. so as we celebrate veterans day with speeches, we'll have a real accomplishment to bring to the american people and the veterans who serve and defend us today. thank you. i yield the floor, mr. president.
mr. rockefeller: mr. president? the presiding officer: the senator from west virginia is recognized. mr. rockefeller: i ask unanimous consent that david goldman who is a detailee from the federal communications commission to the commerce committee be given floor privileges during the debate on senate joint resolution 6. the presiding officer: without objection, so ordered. mr. rockefeller: mr. president, i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:
mr. mcconnell: mr. president? the presiding officer: the republican leader is recognized. mr. mcconnell: i ask consent that further proceedings under the quorum call be dispensed with. the presiding officer: without objection. mr. mcconnell: mr. president, i move to proceed to s.j. res. 6. the presiding officer: morning business is closed. under the previous order, there will be four hours of debate
i ask unanimous consent that the quorum call be lifted. the presiding officer: without objection. mrs. hutchison: mr. president, today's debate concerns the senate joint resolution number 6. in a larger context, though, we really have been having this debate for 34 months. the theme is that the obama administration's relentless imposition of new and destructive regulations have really not helped us get into a recovery and, in fact, i think are freezing our economy. we've seen it with the environmental protection agency when it tried to regulate carbon emissions and greenhouse gases using the clean air act, a purpose for which congress never intended the law to be used. we've seen it with the national mediation board when it overturned nearly a century of precedent and issued a new rule making to allow unions to be formed more easily but harder to
decertify. we've seen it with the national labor relations board when this took the shocking step of challenging boeing's decision to create new jobs by building a new factory in south carolina, simply because south carolina is a right-to-work state. today's issue involves bureaucratic overreach into a symbol of american innovation and creativity. the internet -- because the federal communication commission has now decided to regulate the internet. last december three f.c.c. commissioners on a party-line vote voted to impose rules that restrict how internet service providers offer broadband service to consumers. these rules known as net neutrality impose 19th century-style monopoly regulations on the most
competitive and important job-creating engine of the 21st century: the internet. this marks a stunning reversal from a hands-off approach to the internet that federal policy-makers have taken for more than a decade. during the last 20 years, the internet has grown and flourished without burdensome regulations imposed by washington. powered by the strength of free market forces, the internet has been an open platform for innovation, spurring business development, and much-needed job creation. the former democratic f.c.c. chairman william canard stated in 1999, "the fertile fields of innovation across the communications sector and around the country are blooming because, from the get-go, we have taken a deregulatory, competitive approach to our communications structure, especially the internet."
now the present f.c.c. is reversing that policy that has been successful beyond our expectations. broadband internet networks have powered the information and communications industries, which in 2009 accounted for more than 3.5 million high-paying jobs and about $1 trillion in economic activity. this industry has been an engine for major economic growth, even during these difficult times. yet the f.c.c.'s rules could severely jeopardize this industry'industry's vast potent. net neutrality is intended to limit how internet service providers develop and operate their broadband networks. the net neutrality order allows the f.c.c. to tell broadband providers what kind of business practices are reasonable and
unreasonable. the f.c.c., however, did not bother to clearly define in its rules what the agency considers to be reasonable. this point is vital to understand. with such an arbitrary and yet poorly defined standard, companies will be forced to err on the side of caution. rather than risk possible punishment from the f.c.c., many companies will simply decide, maybe we won't invest right now in new technologies, maybe it's too risky to develop and deploy new services. at the very least it will delay such investment. this kind of regulatory uncertainty will be crippling for companies and particularly small providers. we have heard exactly that from a small wireless internet provider in buy i would called lariat. this is a provider that is serving remote areas and trying to expand to other unserved
areas. lariat testified before congress that these f.c.c. regulations are already harming its ability to attract investors, grow its business, hire more workers, and serve new customers. forcing broadband companies to ask the government for permission before moving forward is exactly what we should try to avoid when reviving our economy. this f.c.c. regime will lead to stagnation in internet innovation in the united states, placing us at a disadvantage against overseas competitors who are not burdened with similar rules. moreover, internet providers will end up spending resources on lawyers and lobbyists in order to comply with the f.c.c.'s rules rather than investing those dollars in innovation. small companies will find it even more expensive to navigate washington, d.c., this certainly won't help
consumers, particularly in rural areas and will only increase the costs thoaf bear. before any new regulations are forced on american businesses, it is the government's responsibility to clearly show, one, there's an actual problem in a need needs to be addressed. that should be foremost. with the f.c.c. taking such a large departure from the agency's previous light-touch approach, one might think the f.c.c. could point to a long list of net neutrality violations and problems that need to be fixed. that is not the case here. in a 134-page regulatory order, the f.c.c. spent only three paragraphs attempting to catalog alleged instances of misconduct, and within those three short paragraphs, every alleged problem was addressed. under the f.c.c.'s existing
rules. or, if not, it was fixed by the provider under pressure from the public or the competitive marketplace, where it should be fixed. as former f.c.c. commissioner mayor death baker noted in her statement dissenting from the f.c.c.'s net neutrality order, "the commission," she said, "was unable to identify a single ongoing practice of a single broadband provider that it finds problematic upon which to base this action." to put it simply, the f.c.c. has issued new rules without even demonstrating that intervention is actually necessary. despite protests to the contrary, these net neutrality regulations on broadband providers clearly establish the f.c.c. as the internet's gatekeeper, a role for which the government is not suited.
innovation does not work on a government timetable, nor does it thrive through a maze of roadblocks. ironically, supporters of net neutrality insist that providers are the ones who may become gatekeepers of the internet. these people say the openness of the internet is far too important to be left unprotected by the government. this is a false premise. in fact, the internet has been an open platform for innovation since its inception, and it has not needed any sort of net neutrality rules from bureaucrats at the f.c.c. and to make matters worse, congress has never given the f.c.c. the explicit authority to regulate how internet providers manage their networks.
that's why the new rules represent an unpress did noted power grab by the unelected commissioners at the f.c.c. in fact, current law states -- and i quote -- "it is the policy of the united states to preserve the vibrant and competitive free market that presently exists for the internet and other interactive computer services, unfettered by federal or state regulation." that's the law today. the f.c.c. has lost this fight already in the courts. last year the d.c. circuit court of appeals struck down the f.c.c.'s 2008 attempt to impose net neutrality in the comcast v. f.c.c. case. the court ruled that the f.c.c. was acting beyond the reach of its congressionally provided authority and cautioned that
regulations should be imposed only with explicit congressional delegation. this was validation that regulatory agencies cannot make policy without congressional direction. rather than back down, however, the f.c.c. doubled down. the current f.c.c. order tries an even more expansive interpretation of the law than was useed in the comcast case. f.c.c. commissioners inexexplicably claim the agency can apply heavy-handed regulations under section 7706 of the telecommunications act. this was a section of the law that was intended to remove regulatory barriers to broadband investments, not to raise them. if the f.c.c.'s legal theory is left unchallenged, the f.c.c. will have nearly unbounded authority to regulate almost
anything on the internet. it is congress's role, not the f.c.c.'s, to determine the proper policy framework for the internet. over time, and aid by the current administration, regulators throughout the government have gradually try to seize increasing control over so many if a sets of american lievment it is time for the senate to stop this overreach. we write the laws of this country, not unelected bureaucrats. that's why we're here today. thanks to senate majority leader harry reid, former senator don nickles and the great senator, late senator ted stevens, one of the tools congress has to stop rogue agencies is the congressional review act. the congressional review act allows congress to review a rule before it takes affect and even
to nullify that rule if congress finds that it is inappropriate or if it overreaches or if congress itself hasn't delegated this power to an agency. as senators reid, nickels and stevens said at the time of this bill's passage, congressional review gives the public the opportunity to call the attention of politically accountable elected officials to concerns about new agency rules. if these concerns are sufficiently serious, congress can stop the rule. we believe the concerns about the f.c.c.'s net neutrality rules are sufficiently serious to warrant the consideration of senate joint resolution 6, the disapproval resolution senator mcconnell and i introduced to nullify the f.c.c.'s net
neutrality order under the congressional review act. the house has already passed its version of the resolution. we need only a majority of senators to send this bill to the president's desk. even a net neutrality supporter, senator olympia snowe, who has authored net neutrality legislation, is a cosponsor and supporter of our resolution today. while senator snowe and i don't agree on the need for net neutrality law, we are in complete agreement, and she stated beautifully, that congress, not the f.c.c., should determine what the proper regulatory framework is for the internet. if the senate does not strike down these regulations soon, they will go into effect on november 20, further jeopardizing jobs in this fragile economy. i guess you could say that it will allow more lawyers to be
hired. but more innovators? probably not. that is not the mix we need to assure that our economy will get back on track in this country. studies indicate that net neutrality rules could significantly affect our economy. if net neutrality reduces capital investment in broadband infrastructure by even 10%, it could cost our country hundreds of thousands of jobs over the next decade. we must preserve the openness of the internet as a platform for innovation and economic growth. we must keep the competitive advantage that we have in this country for innovation. the last thing we ought to be doing is put restrictions on our providers when many countries who are also advanced in this area are not doing the same they
think. so, when we go to global competitiveness, you're putting our companies at a disadvantage. why would we do that? we must stop. the job-kelg regulatory -- the job-killing regulatory interference by our government today in so many areas. and we can start right here, right now by keeping the internet free, voting for this resolution of disapproval and saying to the regulatory bodies in this town, congress must authorize a dell tkpwaeugs of authority for your agency -- a delegation of authority for your agency to pass rules and especially when congress is in disagreement with those rules. this is a key policy decision for our body. we need to step up for the responsibility that congress
has. you know, our constitution divided the powers between three branches of government. if congress doesn't stand up for its one-third of the powers of this government and lets unelected bureaucrats run over our prerogatives, we will become a weaker branch, and our government will become weaker for it. we need to have three equal branches of government, and that means each branch of government must fulfill its responsibilities under the constitution. congress must delegate its authority explicitly for a rule to be made. that is the way the constitution intended for congress to fulfill its job as the elected representatives of the people of our country.
the house has passed this resolution. i hope the senate will tomorrow. i hope the people will speak and say even if you disagree on the basic issue of net neutrality that it is not the right of the f.c.c. to pass such sweeping regulations that will affect the economy of this country without explicit authority from congress, which it does not have. thank you, mr. president. and i would like to just ask my colleagues to come to the floor if they want to speak on this amendment, on this resolution. there are four hours equally divided, and that time is now running. so i would say to my republican colleagues, we have quite a list of those who want to speak. they must know that the time will run out in about three and
a half hours now. so i ask them to contact me if they wish to speak. thank you, mr. president. and i yield the floor. the presiding officer: the senior senator from the great state of west virginia. mr. rockefeller: mr. president, i rise today to oppose the senate joint resolution number 6, a resolution brought under the congressional review act about which i'd like to talk to disapprove the federal communications, f.c.c.'s open internet rules such as they are. americans want the internet to be free and open to them. they want to go where they want to go. they want to see what they want to see. they want to do what they want to do on the internet. they don't want to have somebody blocking them. they don't want to have gatekeepers. they want it to be a nice, a nice, open forum for them. and they care about the internet. everybody uses the internet.
they want to be able to develop new businesses. they want to read. they want to watch video. they want to reach out to friends and family and community. and they want to do it online. and they want to do all of these things on the internet without having to ask permission from their broadband provider. the f.c.c. has promulgated balanced rules that let americans do all of these things and keep the internet open and which keep the internet free. so let us be clear from the outsed, no matter how -- outset, no matter how s.j. res. is dressed up in language that suggests it will promote openness and freedom, it will not do that. the resolution is misguided. it will add uncertainty, in fact, into the economy.
it will hinder small businesses dependent on fair broadband access, where otherwise they might be put in a slower lane. tkhoepbt want to be in a -- they don't want to be in a slower lane. they want to be in a fast lane. they want to be able to compete with other parts of the country. it will undermine this legislation, this resolution. it will imperil the hallmark of freedom. the f.c.c. rules were the result of hard work and consensus and compromise. the agency had extensive input from agencies of all quarters and they opened it up and said send in your comments. they had written input from more than 100,000 commentators. about 90% of those filing supported -- who did that supported adoption of open internet rules.
open internet rules. on top of this, the rules are based on long-standing and widely accepted open internet principles which were first articulated during the bush administration, the second bush administration. these rules do three basic things, mr. president. first, they impose a transparency obligation on providers of broadband internet service. this means that all broadband providers are required to publicly disclose to consumers accurate information regarding the network management practices. second, the rules prohibit fixed broadband providers from blocking lawful content, from blocking applications and services and devices. this means consumers and innovators will continue to have the right to send and receive hraufpl internet traffic -- hraufpl internet traffic with broadband providers subjected to
a more limited set of prohibitions. i'll speak about that in a moment. third, the rules aim to ensure that the internet remains a level playing field by prohibiting fixed broadband providers from unreasonably discriminating in transmitting lawful network traffic, which they have done. finally, the rules are meant to apply with the complimentary principle of reasonable network management which provides broadband providers the flexibility to address congestion or traffic that is harmful to the network. these are the principles i believe everyone can support. i see nothing wrong with them. the word reasonable sometimes doesn't scare me. sometimes it should but it doesn't. i ask my colleagues what's wrong with transparency? what's wrong with that? why would twaoept promote
internet -- why would we want to promote internet blocking? why would we want to have some people on the fast lane or some people in the slow lane? what is unreasonable about reasonable network management? i believe the f.c.c.'s effort along with the ongoing oversight and enforcement will protect consumers. and i believe it will provides companies with the certainty they need to make investments in our growing digital kpheufplt many champions of the open internet would have preferred a stricter decision. i'm one of them. i myself have real reservations about treating wireless broadband differently from wired broadband. i think the f.c.c.'s decision was nevertheless a meaningful step forward, and in a moment i will talk about other people who feel the same. supporters of the joint resolution fail to acknowledge
the f.c.c.'s open internet rules have received overwhelming support from broadband internet service providers, consumers and public groups, labor unions as well as high-tech companies. at&t c.e.o. randall stevenson stated earlier this year that while he wanted in fact no regulations, the f.c.c. open internet order, he said, ended at place where we have a line of sight, and we know and can commit ourselves to investments. time-warner cable stated at the time of the order's release of the rules adopted, they appear to reflect a workable balance between protecting consumer interests and setting incentives and innovation by broadband internet service providers. numerous analysts from major investment banks found the open
internet orders removes what they call regulatory overhang and allows telecom and cable companies to focus on investment, google, facebook, twitter, ebay, skype and other leaders in the nation all urge the f.c.c. to adopt commonsense baseline rules -- their words -- critical to ensuring that the internet remains a key engine of economic growth, innovation and global competitiveness. there are more than 150 organizations who wrote congress to oppose this joint resolution. i hate doing this. i hate reading lists, but i'm going to do it anyway. the communication workers of america, the afl cry, the naacp, the united states conference of catholic bishops, the american library association, the american association to independent music, leadership conference on civil and human rights, the league of united
latin american citizens, the national organization for women, and tech net. a lot of folks in tech net. they have a lot at stake on this. mr. president, i have their letters here, and i would ask that they be added to the "congressional record" at the appropriate place. the presiding officer: without objection. mr. rockefeller: to be sure, there are those who disagree with the f.c.c.'s open internet rules and there is an avenue for these complaints, and it's called the judicial system. some are using it. two companies have filed lawsuits claiming that the f.c.c. went too far. several public interest groups have filed lawsuits claiming that the f.c.c. did not go far enough. well, it's their legal right to go to the courts and when they choose to do that, they can do that. so let's think for a minute what a world would look like without a free and open internet.
in a world without free and open internet, consumers and entrepreneurs would have no transparency as to how their broadband provider manages its network, no ability to make informed decisions about their broadband provider. in a world without a free and open internet, there would be nothing to prevent your broadband provider from steering you only to its preferred web sites and services, limiting, therefore, your choice as a consumer. if you are a rural american, broadband internet access has the power to erase distances and allows to you have the same access to shopping, educational matters, employment opportunities as those living in urban areas. that's a time-honored principle around here. but, not if the web site that you seek to access is blocked by
your internet provider, your broadband provider. consumers and entrepreneurs, small businesses need the certainty that they can access lawful web site of their choice when they want, period. in a world without a free and open internet, there would be nothing to stop broadband providers from blocking access to web sites that offer products that compete with those of its affiliates. that happens, mr. president. in a world without a free and open internet, companies could pay internet providers to guarantee their web sites open more quickly than their competitors. now, in a world without a free and open internet, companies could pay internet providers to make sure that their o online sales are done more quickly. wcialtion that's not the american way and it's particularly disturbing in tough
times like these. in a world without a free and open internet, there would be nothing to prevent internet service providers from charging users a premium in order to guarantee operation in the fast line, quote, unquote. if you're trying to start a small business, struggling to make ends meet and cannot afford to pay the toll, you run the risk of being left in the slow lane. that's not good. with inferior internet service. that's not right. unable to compete with larger companies. that's very wrong. and what if you are an innovator or a start-up company and you have the next big idea? with broadband, the next big idea does not have to come from the suburban garage or from the silicon valley. it can come from rural america. it can come from anywhere. a free and open internet is all that is required to give that
big idea a global reach. in a world without a free and open internet, the ability of the next revolutionary idea to reach others to make it to the greater marketplace would be entirely dependent on a handful of entrenched broadband gatekeepers and toll collectors. now, i'm not totally opposed to the congressional review act, but i got to say, mr. president, it's extraordinarily blunt -- this extraordinarily blunt instrument, it means that all of the rules adopted by the f.c.c. must be overturned at once. this would even mean tossing out commonsense provisions about transparency. do our opponents know this? it would deny the agency the power to protect consumers. do our opponents know this? what's the sense in all of that?
i don't get it. and there's another part that if they take out what you're doing through -- if s. res. would have passed and they just took these rules out, you couldn't come back and have the f.c.c. put them in. you'd have to go through a whole congressional legislative process to reinssert them into the public law, which means many of them would never end up there. i also want to address the argument of supporters of the joint resolution that the f.c.c.'s open rules will somehow stifle innovation in the internet economy. that is just so wrong, i don't know what to say. over the past 15 years, it is the internet that has been the greatest engine of the u.s. economy. it leaves everything in its du dust, creating more than 3 million jobs, as the senator from texas indicated. the open unts net rules will help sustain this -- the open
internet rules will help us stain this growth. people have to want to know what the rules of the world are, they want know what the world is bringing for them. if they decide they don't like what's coming, they'll tell you and they're not going to invest of the very simple. according to hamilton consultants, the open internet ecosystem, which led to the creation of 1.8 million jobs related to applications and e-commerce and as well 1.2 million jobs related to infrastructure. moreover, investment innovation has continued to increase since the adoption of the f.c.c.'s adoption of the open internet rules, not decrease, as the supporters of this resolution will tell you. the facts show that in broadband -- that investment in broadband networks increased in the first half of 2011. in fact, investment in networks that support broadband was more than 10% higher in the first half of 2011 than in the first
half of 2010. and more of that investment in internet companies surged in 2011, and this is after they sort of adjusted and had taken into account what they saw coming. -- saw coming in the way of the rules. there was a $2.3 billion investment going into 275 companies in the second quarter, all of them of this internet type. that is the most investment in internet companies in a decade. plus shortly after the framework is adopted, america's leading wireless providers announced that they were accelerating their deployment of their fourth generation networks. it seems it is giving
entrepreneurs and investors the certainty they need to invest and create jobs. certainty is key. they're not going to invest in what they don't know. we see that in so many other areas. we see that in so many other areas. people have all this cash, they don't have certainty. here they have certainty. they understand the sent. they understand what's coming and they like it and they're investing like never before. the f.c.c.'s open internet rules also, mr. president, protect small businesses. as estimated, about 20,000 small businesses operate on the internet. more than 600,000 americans have part- or full-time businesses one ebay alone sms i was not aware of that. the f.c.c.'s open internet rules mean that small entrepreneurs will not have to seek permission from broadband providers to reach new markets and consumers with innovative products and
services. this is a very important point. it means that small business can be located anywhere in this country, including rural america, and through open broadband have the opportunity for their ideas and products and services to have a global reach. that's the point of all of this. and as we all know, small businesses were responsible for nearly 65% of all jobs over the last 1r5 years. far from preventing investment, the f.c.c.'s open internet rules will foster small businesses because they trust it, they see it, they see what moody's is saying about it, they see what the wall street investors are saying about it, they see that it's encourage investment, they like that, they trust that and so they take risks that they might otherwise not take because they rust. it is not the faceless bureaucrat. it is on paper. they understand it. they've probably seen it
commented on it. maybe some of them didn't like it as much as they should have. some of them thought it should have intn stronger, some thought it should have been weaker. such is life in america. so, anyway, i think what they conclude is that what's going on is supporting what they're doing. finally, i want to note that when it comes to education and privacy and intellectual property, global internet governance or network security, the government has long provided and necessarily so reasonable rules of the road to make possible consumer protection, fair trade, and open markets. the f.c.c.'s open internet rules are no different. they take, as has been quoted by many, a light-touch approach. like that phrase -- and keep the
playing field fair. they keep the internet open and free for consumers, for businesses, for everyone in this country who wants access to broadband internet. so that is why, mr. president, i support the f.c.c. open internet rules, and i encourage my colleagues to vote against the joint resolution. the presiding officer: the senator from texas. mrs. hutchison: mr. president, on our side, i have senator wicker and senator shelby, who have been here waiting, and i'd like to give them 15 minutes for -- from the time from our side. i notice others are here, but they have been waiting for quite a while. the presiding officer: is that 15 minutes each or 15 minutes together? mrs. hutchison: up to five minutes for senator wicker and up to ten minutes for senator shelby. the presiding officer: is there objection?
a senator: [inaudible] the presiding officer: there is to order after that. mr. kerry: i would ask that i be recognized, have up to 15 minutes after that. the presiding officer: is there objection? without objection, so ordered. the senator from mississippi is recognized. mr. wicker: thank you, mr. president. i rise today taxco spoonders strong support -- i rise today as a costron strong cosponsor. regulations work against getting our economy back on track. this is a perfect example of the government standing in the way of growth and investment. the internet and its associated applications should be allowed to develop without excessive f.c.c. red tape. the internet owes a great deal of its rapid success to innovators and entrepreneurs who had the freedom to imagine, to
spleenders t -- to explore and o create. with the f.c.c. acting as a traffic cop, this freedom will be compromised. the rules as laid out by the f.c.c. are a prescription for uncertainty within the industry. by handing over more power to a government agency, net neutrality rules slam the brakes on potential investment and new innovation. the ideas that should make our internet faster, more secure, and better for consumers falls by the wayside. tend of the day, the american consumer would -- at the end of the day, the american consumer would suffer. the broadband marketplace would offer fewer services and less content to paying customers. the f.c.c. order reads that the internet shall not block lawful content, applications, services, or nonharmful devices subject to reasonable network management. it goes on to say that providers shall not unreasonably discriminate in transmitting the
lawful network traffic over a consumer's broadband internet server but the ferms kings lawful" and "reasonable "resignation not easily defined. under the order, what is lawful and reasonable would be determined by unelected bureaucrats. the f.c.c. would rule as a de facto police of the open and free internet. the f.c.c. would be the final arbiter of what broadband service providers can and cannot do. it's judgments, not the market or the consumer, would determine how networks would be managed. the f.c.c. is claiming to have an authority that the american public did not grant it. the hand of the internet service providers will be tied when the f.c.c. has this kind of power. without being able to run their own networks, service providers cannot mac maximize the online service. they are prohibited from doing
what they were established to do. the commission's sord trying to fix a problem that does not exist. today's consumers have greater access to more internet services than ever before. where's the problem? businesses have invested tens of billions of dollars in new broadband infrastructure. internet entrepreneurs continue to offer new services to broadband users. there's no economic justification for this unprecedented intrusion into the marketplace. policy should benefit the public and these f.c.c. rules do not.e, mr. president, we've seen this movie before with regulation where regulation is not needed. again here, we have a regulatory recipe that would produce far-reaching and damaging effects. the current landscape has allowed the internet to grow exponentially. it is a free market of competition, productivity and growth. the f.c.c.'s regulatory intrusion is completely unwarranted.
and i yield back. mr. mccain: mr. president? the presiding officer: the senior senator from alabama is recognized. mr. shelbyshelby: mr. presidenti think a lot of people mean well but often misguided when they say we're going to regulate this sector of the economy, we're going to regulate this and that. but the market, mr. president, as you well know, the market is the driving force in our economy. not just in the united states but worldwide. and it's going to be the market that will decide what we do as far as job creation for our people everywhere. and the internet, as an example, i believe, of, gosh, let's don't overregulate, it let it grow, let it do its job and it will. i associate myself with the remarks of the senator from mississippi and also the senator from texas. mr. president, i also would like to speak about some commonsense steps that congress can take right now to help our struggling
economy. at a time when job growth is stagnant, congress needs to lift the regulatory burden that is stifling capital formation. the senate has before it several bills that would help private businesses raise the capital that they need to grow and to create jobs. this is an issue, mr. president, that should enjoy the support of both republicans and democrats here in the senate. access to capital, as the presiding officer well knows, is what allows entrepreneurs to transfer new ideas into living companies. novel products, new services and, most importantly, good jobs can be created. unfortunately, overregulation has made it progressively harder for small businesses to access capital in this country. i'll give you some statistics. they're clear. in the 1990's, an average of 547 initial public offerings took
place each year compared, mr. president, with an average of just 192 per year after 1999. small initial public offerings now make up only 20% of the total. in contrast, they made up, mr. president, 80% of the total in the 1990's, when we were creating so many small jobs. in addition, the number of new businesses being launched each year is failing. in 2010, it was the lowest it's been since the bureau of labor statistics started tracking the number in 1994. the s.e.c. has been slow to address these problems even though it has the authority to do so. the chairman of the s.e.c. has spoken of the need for action but we have not seen tangible results yet. a year ago, one s.e.c. commissioner remarked -- and i quote -- "my hope is that as an agency, the commission will move beyond talking about small
business capital formation and will take concrete steps and actually foster it. mr. president, i believe we, the senate and the american people, can no longer wait for the s.e.c. to do its job. the time has come for congress to take action. our economy cannot afford to wait any longer. the first thing i believe we should do to improve capital formation is to bring up for consideration several bipartisan bills that would implement important regulatory reforms. one bill would modernize the s.e.c.'s regulation "a" which was initially designed to make it easy for small businesses to access or capital market. unfortunately, regulation "a" is outdated and rarely news. another set of bills would raise the thresholds for reporting so that small banks and small companies are not subject to burdensome s.e.c. reporting requirements.
these bills would still -- still leave investors protected and ensure that public companies provide meaningful disclosure. most importantly, investors would still be protected by the s.e.c.'s antifraud rules. these bills, these bipartisan bills i'm speaking of, represent a few steps that we can take right now, but they're not comprehensive by any means. much more needs to be done to make sure registration requirements are tailored to the size and the type of businesses. the existing one-size-fits-all approach means that small companies have to bear the same costs that large companies do when they go public. these inequities need to be addressed. it stifles job creation. one would think that we could agree here in the senate on removing unnecessary restrictions on capital formation yet for the past three years, the majority party has dramatically increased government involvement in the economy.
they have imposed one costly mandate after another on businesses. they've crowded out the private sector with massive government programs, resulting in persistently high unemployment and stagnant economic growth. mr. president, basically i think it's time for a new approach. it's time to revitalize the free markets in america. we can begin this effort by taking these small steps to help entrepreneurs find the capital that they need to build their businesses and to create jobs. i hope that my democratic colleagues will now do more than talk and that we can work on a bipartisan basis these bills that have bipartisan sponsorship to create jobs and join us here. thank you, mr. president. the presiding officer: the senator from massachusetts is recognized.
mr. kerry: mr. president, thank you. mr. president, this is one of those times when on the floor of the united states senate we hear a proposal that people characterize as one thing but it is, in fact, anything but what they're characterizing it as. what senator -- i just heard the good senator from mississippi talking about this, we don't want to slai slam the brakes on development, he said. we don't want to have the f.c.c. intrusion. so they're trying to say to the american people that they want to liberate the internet when, in fact, what they want to do is imprison the internet within the hands of the most powerful communications entities today to
act as the gatekeepers who will control the ability of the internet to do the very kind of development that brought us here. what they're talking about, their -- their concept, this c.r.a. challenge, is a wolf in sheep's clothing. it's that simple. and so i think colleagues need to really step back and think about how the internet got to be what it is today and when it was developed. i know the senator from west virginia, the chairman of the committee, and i were members of the commerce committee back in the 1990's when we wrote the telecommunications act of 1996 and we thought, you know, we were pretty clever and we wrote a good act. and within six months of writing that act, it was obsolete because all of our conversation was about telephony, at a moment where because of the internet, the entire discussion was about to become about data
transmission and the movement of information over the internet. and -- and that has never been so fully revisited. but the reason we have a google today, the reason we've had this incredible development of internet retail business, of all of these web sites, of facebook and so many more is because of the open architecture of access to that internet. which, i would remind everybody in america, was created by government money in government research. it came out of an effort to develop a communications system for our country in the case of nuclear war. and so we created through darpa, arpa research that produced this communications network, and then the private sector saw the opportunity and a whole bunch of very creative people rushed in and made the internet what it is today.
overturning the rules, as the c.r.a. proposes to do, would put the very open architecture that has created this extraordinary agent of communication and commerce and family communication and all these things that it's done for business, it would put it at risk and discourage investment in companies at the edge of the interneat really could be the -- internet that really could be the next google or the next amazon. overturning these rules would actually hurt our competitiveness and economic growth and they would diffuse the creative energy that has driven the internet to be what it is today. because if you overturn the internet today, you take the reality of the internet and you put it in the hands of the gatekeepers. everything that goes over the internet today goes either through your telephone at home or television or whatever, through cable, out of your house or the ou airwaves.
but if we're not having an open architecture on the internet, then the people who control those access points can start discriminating about who gets access at what speed. and if you control who gets access at what speed and begin to charge more for that, you begin to have a profound impact on the ability of any business to develop and a profound impact on the access that consumers have come to anticipate with respect to the internet. the network neutrality -- think about this, we're talking about neutrality. we are standing here trying to defend neutrality. the other side is coming here and trying to create a new structure where the process will be gamed once again in favor of the most powerful. i mean, this is really part of the whole debate that's going on
in america today about the 99% who feel like everything is gamed against them and the system is geared by the people who have the money and the people who have the power who get what they want. that's what this debate is abo about. the network neutrality rules that the f.c.c. has promulgated are based on the principle that everybody should support, called promoting transparency of broadband service operations, preventing the blocking of legal content and web sites, and prohibiting discrimination of individuals, applications and other web sites. that's what we are for, and this c.r.a. is an effort to undo the f.c.c.'s ability to protect those principles. establishing those principles has actually brought about certainty and predictability to the broadband economy. it ensures that anyone can create a web site, anyone can deliver an internet enabled
service, with the certainty that it's going to be made available to everybody else on the internet. innovators now know that they're not going to have to go ask a big telephone company, hey, verizon, hey, at&t, will you guys please let us have access so we can go do this thing? oh, well, maybe we'll do that but we're going to charge you in order to do that. i mean, you completely destroy the openness that has provided this -- this ability for anybody in america to sit in their home or school or somewhere and come up with an idea and innovate. that freedom to innovate, the freedom to innovate is what has made the internet the platform for economic and social development that it is today. and a vote for the c.r.a. is a vote to stifle that. on the side of those favoring the f.c.c.'s action are venture capitalists and the companies that have made the internet what it is today, civil-rights
groups, liberty -- civil liberty advocates, academics, scholars who have studied and testified to the virtues of open networks. let me just quote a few of them. john door is somebody that many of us have come to know by virtue of his business acumen and the legendary venture capitalist efforts that he has engaged in. he was an early backer of amaz amazon, an early backer of google, electronic arts, netscape, a number of other innovators -- innovations and of other innovators whose creations have driven the growth of the internet. here's what he says. "maintaining an open internet is critical to our economy's growth and this effort is a pragmatic balance of innovations, economic growth and crucial investment in the internet." ray ramsey, the president and c.e.o. of technet, which is a national bipartisan network of
more than 400 technology sector c.e.o.'s, said of the -- of the vote of the commission in favor of the network neutrality rules -- quote -- "the vote by the federal -- by the f.c.c. is a pragmatic recognition of the need for codifying principles for protecting nondiscrimination and openness for the internet." charlie ergen, the president and c.e.o. of dish network, said, "the commission's order is a solid framework for protecting the open internet. the new rules give companies, including dish network, the framework to invest capital and manpower in internet-related technologies without fear that our investment will be undermined by carriers' discriminatory practices." others support others supporting the order include the communication workers of america, civil rights organizations, consumer advocates. in sum, madam president, in sum,
those who support the rules include those who fund the development of internet companies. those who use the internet, advocates who favor open discourse and debate, and i think here in the united states senate we ought to listen to the people who created it, the people who develop it, the people who are taking it to the next generation and the people who use it. and the los angeles times editorialized on sunday in favor of the rules of the f.c.c., saying the agency's net neutrality rules are a reasonable attempt to protect the innovative nature of the internet and should not be overturned. yet, despite all of what i just said, some have made what i have called the wolves in sheep's clothing arguments, the false arguments that network neutral ity rules regulate the
internet, they actually regulate it, and that this is an opportunity to keep it open and impose a condition on innovators. i don't know how asking innovators to get permission from somebody else to be able to go do what they have already done since 1990's is going to improve things. the truth is that network neutrality rules govern not the internet, but they govern the behavior of the firms that own and operate the gateways to the internet. that's what's at stake here. and when the airwaves that carry the information that connects you to everyone else on the internet is in the hands of a few and subject to their control, we are in trouble. the rules we're debating today state that those gateways should not be used to favor some voices over others or some firms over others on the internet. that's what's at stake here. that's what this fight is about. the truth is that if the rules
are overturned, every innovator on the internet will be exposed to the risk that before they innovate, before they create a new product, they're going to have to go to somebody and say mother, may i do this? and then there will be a price attached to that. beyond the false argument that network knew tralt neutrality constitutes regulation of the internet rather than anticompetitive behavior, opponents to the rule predicted that the f.c.c. action is going to have negative economic repercussions. yet even in an economy that has struggled, that prediction has proven to be wrong. in the time since the f.c.c. voted on the rule to preserve the open internet, investments in networks that support wired and wireless broadband grew by more than 10% compared to the same period the year before, and venture capital investments in internet-specific companies
surged with $2.3 billion going into 275 companies in the second quarter of 2011, and the long -- it may well be that 2011 is going to be the biggest year for tech i.p.o.'s in more than ten years. that seems to indicate that strong investor confidence in the companies that rely on the open internet already exists, and we should not disrupt that. having lost the argument that network neutrality hurts innovation or the economy, they therefore want to go and create a new argument. that is, that the f.c.c. acted outside its legal authority in protecting the free flow of communication on the internet. well, mr. president, a court, the right place for that decision to be made is going to make that decision. but here again, the argument
actually challenges common sense, challenges basic sort of understanding of reasonableness here. to argue that the f.c.c., the agency that congress created in order to regulate communications by wire and radio somehow has no jurisdiction in this very space is to really argue that communications over the internet are not in fact conducted over a wire or over the airways. it is completely lacking in any foundation in common sense and certainly in the law. the law that we created grants the f.c.c. the authority in the telecommunications act to -- quote -- "make such rules and regulations and issue such orders not inconsistent with this act, as may be necessary for its functions." that's the power we gave to them. and under title 2, title 3, title 6 of that act, it
encourages the f.c.c. to protect the public interest and encourage just and reasonable rates through competition. that is precisely what net neutrality achieves. it is precisely what we achieve under the rules of the f.c.c. and under title 7, the f.c.c. is mandated to take immediate action to remove barriers to infrastructure investment and promote competition in the telecommunications market if advanced telecommunications is not being deployed in a reasonable and timely fashion. that can be determined on a case-by-case basis, and we obviously can continue as we have since the early 1990's to do this. so there is no good reason for this debate to fall along party lines. i hope it will not be just democrats who vote to preserve this rule, and i hope we will maintain an open internet
technology and support the open internet border. i thank the chair. mrs. hutchison: madam president. the presiding officer: the senator from texas. mrs. hutchison: madam president, i know the senator from minnesota has been waiting to speak, and i certainly would yield to him. i would like to be recognized immediately after he speaks to answer some of the concerns that were raised by the senator from massachusetts. the presiding officer: without objection. mr. franken: mr. president. the presiding officer: the senator from minnesota. mr. franken: i appreciate the courtesy of the senator from texas. my understanding is that senator murkowski from alaska is on her way down here. i am scheduled to sit in the chair at 12:00 and i don't want to step on the senator from alaska's opportunity to speak, and since the senator from massachusetts -- the presiding officer: the senator from minnesota is recognized.
you're recognized. mr. franken: i really appreciate both the president and the senator from texas' courtesy. madam president, i rise today to urge my colleagues to vote against the motion to proceed to senator hutchison's joint resolution of disapproval which would repeal the f.c.c.'s net neutrality rules. as many of you know, i have repeatedly said that net neutrality is the free speech issue of our time. i still believe that is the case, and i'm here to tell you why we need to do everything we can to stop this partisan resolution in its tracks, but before i get into the reasons why we should oppose this resolution, i think it is important to step back and remember what the american people expect of us. i don't need to tell anyone in this body that congress' approval rating is at an all-time low. and why is that? well, i think it has something to do with the fact that we are using our extremely limited valuable time to debate partisan
proposals like this one rather than working together to create jobs, stimulate our economy and get americans back to work. when this resolution of disapproval passed the house back in april, i hoped that that would be the end of it. i hoped that my colleagues would recognize that we should let agencies do their jobs and not employ an arcane procedure to erase a rule that the f.c.c. started thinking about in 2004, under republican chairman michael powell. again in 2005, when a different republican chairman, this time kevin martin, adopted a unanimous policy statement on net neutrality. when the white house issued a statement indicating the president would veto this resolution of disapproval, if it came to his desk, i thought my colleagues would be sensible and would recognize that this was
not only unnecessary and foolhardy, but it was also pointless exercise that would be just a giant waste of everyone's time, but alas that was not the case and here we are spending valuable time on two resolutions of disapproval when we should be turning to legislation that will get our economy back up and running again. i hope the votes we take tomorrow will send a strong message that we need to stop these political stunts and work together to create jobs, jobs and more jobs, but let's get to the substance of why i'm standing here before you today. i'm here today to talk to you about net neutrality. net neutrality is a simple concept. it's the idea that all concepts concepts -- all content and applications on the internet should be treated the same, regardless of who owns the
content or the website. this is not a radical idea. it certainly isn't a new one. you may not realize it, but net neutrality is the foundation and core of how the internet operates every day and how it has always operated. when scientists and engineers were creating the basic architecture of the internet, they decided they needed to establish some basic rules of the road for internet traffic. one of the fundamental design principles of the internet was that all data should be treated equally, regardless of what is being sent or who is sending it. that is net neutrality. it is the same principle you rely on every day when you use the internet, and it is the same principle that your phone
companies must adhere to when they connect your phone calls. they can't discriminate based on what you say or who you call, and the founders of the internet thought the same should be true about data traveling across networks. everything and everyone should be treated the same. this principle of nondiscrimination is baked into the d.n.a. of the internet. this isn't radical or new. this is about having a platform that is free and open to all, regardless of whether you are a big corporation or a single individual, and regardless of whether you pay a lot of money to speed up how fast your content gets to your customers. net neutrality is what we all experience today when we log onto our computers, and it is what we have always experienced since the very beginning of the
internet. i think it is important to focus on that point for a minute, because our opponents are telling you something quite different, and they are wrong. net neutrality is not about a government takeover of the internet, and it isn't about changing anything. net neutrality and the rules that the f.c.c. passed are about keeping the internet the way it is today and the way it always has been. you know, we take for granted that we can access google's search engine as easily as we can access yahoo or bing or that netflix's videos download as easily as the videos your friends uploaded onto youtube last nature. we expect that emails arrive at their destinations at the same speed, regardless of who is spending them, and we take for
granted that the website for your local pizzeria loads as fast as the website for domino's or pizza hut. and that is one of the reasons i care so very much about this issue. this isn't just about freedom of speech. it is also about protecting small businesses and entrepreneurs of all sizes. net neutrality is and always has been, in my mind, about protecting the next bill gates and the next mark zuckerberg. facebook and microsoft don't need our help today. but the 20-year-old whiz kid working in his parents' garage to develop the app or software or website to revolutionize our lives does need net neutrality, and so does a small bookstore or lo